Financial markets/ Financial institutions : Debit Cards

Overview

• It has been over ten years since banks began to issue debit cards in place of ATM cards. Debit cards can do everything that ATM cards do plus they can be used to purchase goods and services at most stores that accept credit cards.

• The banks have promoted the use of debit cards to pay for goods and services, for example by offering a five percent discount on debit card purchases.

• However, unlike shoppers in some other countries, debit cards have not become a common way of purchasing goods and services in Thailand, largely due to the small number of stores that accept them and because those that do, often require a minimum purchase for credit or debit card payments. There are also consumer concerns about liquidity and safety when using debit cards: they do not feel comfortable having funds directly deducted from their accounts when the transaction occurs.

• One consumer concern is that if lost or stolen, until the bank is informed to cancel the card, it can be used fraudulently with a forged signature to purchase goods and services, the cost being deducted from the consumer's account.

• Most consumers who hold both credit and debit cards prefer using credit cards to pay for goods and services because banks and other financial institutions focus more on growth in the credit card market and offer greater benefits for using the credit card. In addition, customers do not have to actually pay until the credit card statement is issued, and then they have the option of making only a minimum payment of 10 percent of the outstanding balance. On the other hand, remaining outstanding balance is charged interest at an annual rate of 20 percent.